Australian Wind Energy Now Cheaper Than Coal, Gas, BNEF Says

Feb. 7 (Bloomberg) -- Wind is now cheaper than fossil fuels
in producing electricity in Australia, the world’s biggest coal
exporter, according to data compiled by Bloomberg.

Electricity can be supplied from a new wind farm in
Australia at a cost of A$80 ($84) per megawatt hour, compared
with A$143 a megawatt hour from a new coal-fired power plant or
A$116 from a new station powered by natural gas when the cost of
carbon emissions is included, according to a Bloomberg New
Energy Finance report. Coal-fired power stations built in the
1970s and 1980s can still produce power at a lower cost than
that of wind, the research shows.

Relying on fossil fuels to produce electricity is getting
more expensive because of the government’s price on carbon
emissions imposed last year, higher financing costs and rising
natural gas prices, BNEF said. The cost of wind generation has
fallen by 10 percent since 2011 on lower equipment expenses,
while the cost of solar power has dropped by 29 percent.

“The fact that wind power is now cheaper than coal and gas
in a country with some of the world’s best fossil fuel resources
shows that clean energy is a game changer which promises to turn
the economics of power systems on its head,” Michael Liebreich,
chief executive officer of Bloomberg New Energy Finance, said in
a statement today.

Renewables Target

While wind energy has become more competitive, Australia’s
plan to get at least 20 percent of its power from renewables by
the end of the decade is still required to drive investment
because of weak energy demand, the report said.

Xinjiang Goldwind Science & Technology Co., China’s largest
wind-turbine maker, said in December that it’s studying new
projects in Australia, while Vestas Wind Systems A/S, the
world’s biggest turbine maker, said in November it expects to
keep more than 50 percent of the Australian market.

Australia last year started charging its biggest polluters
a price of A$23 a metric ton for their carbon emissions to
discourage the use of fossil fuels and fight climate change.
Natural gas prices in Australia may triple by 2030, BNEF said.

“The low and falling costs of renewable energy and high
and rising costs of coal- and gas-fired plants suggest that much
of Australia’s new generating capacity is likely to be
renewable,” Sydney-based Bloomberg New Energy Finance analyst
Kobad Bhavnagri wrote in the report.

AGL Energy Ltd., Australia’s largest developer of renewable
energy projects, said in November that it expected the A$1
billion ($1.03 billion) Macarthur wind farm in Victoria state to
begin operating fully this month. AGL in October suspended the
development of the first stage of its 1,000-megawatt Dalton gas-fired power station in New South Wales after reviewing the
economic viability for several months.

Driven by hydro- and wind-power projects, renewable energy
contributed 9.6 percent of Australia’s electricity production in
2011, up from 8.7 percent the prior year, according to the Clean
Energy Council, an industry group.